What should the continuous dividend yield be replaced by when options on an exchange rate are valued using the formula for an option on a stock paying a continuous dividend yield?
A. The domestic risk-free rate
B. The foreign risk-free rate
C. The foreign risk-free rate minus the domestic risk-free rate
D. None of the above
B
The continuous dividend yield, q, should be replaced by the foreign risk rate, rf.
You might also like to view...
As the acceptable level of detection risk decreases, the assurance directly provided from:
A. substantive procedures should decrease. B. tests of controls should increase. C. substantive procedures should increase. D. tests of controls should decrease.
Computer packages like SPSS, SAS, EXCEL, and MINITAB can be programmed to identify out-of-range values for each variable and print related code information to make it easy to check each variable systematically for out-of-range values
Indicate whether the statement is true or false
"Technology push" refers to those situations in which
a. the product is released early to innovators. b. technological uncertainty prevents the product's release. c. the target market is a well defined group of "techies." d. the product is vulnerable to obsolescence. e. R&D is the prime mover behind innovation and marketing efforts and thoughts about a specific market segment are only secondary.
CASE 15.1 Utility Air Regulatory Group v. EPA (2014), involved a question of whether the EPA's regulation of __________ for passenger vehicles triggered permits for __________ that emit greenhouse gases
a. pollution, stationary sources b. greenhouse gas emissions, statutory sources c. greenhouse gas emissions, commercial trucking vehicles d. greenhouse gas emissions, stationary sources